The Spot Rate Between Japan and the U

question 63

Multiple Choice

The spot rate between Japan and the U.S. is ¥100.37 = $1, while the 1-year forward rate is ¥99.97 = $1. A 1-year risk-free security in the U.S. is yielding 3.8 percent. What is the rate of return on a 1-year risk-free security in Japan assuming that interest rate parity exists?

• A) 3.32 percent
• B) 3.39 percent
• C) 3.44 percent
• D) 3.49 percent
• E) 3.56 percent

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Definitions:

Cultural Diffusion

The spread of cultural beliefs and social activities from one group to another, often leading to cultural assimilation or changes.

Homogenization

The process through which diverse elements are blended into a uniform mixture, often used to describe cultural or biological assimilation and standardization.

Social Movements

Collective, organized efforts aimed at promoting or resisting changes in society, often driven by grassroots activism.

Institutions

Established organizations or systems of rules and norms that structure societal interactions, such as legal systems, education, and economic markets.